We have recently cloned a cDNA encoding a mutant form of PRL receptor (PRL-R) from Nb2 cells, a PRL-dependent T lymphocyte-derived cell line. This cDNA is identical to the long form of the rat PRL-R, except for a deletion of 594 base pairs in the cytoplasmic domain, resulting in a mature receptor protein of 393 amino acids. Although a segment containing three cytoplasmic regions of moderate to high amino acid sequence identity with members of the PRL/GH receptor family is missing in this receptor form, the region of highest (70%) identity is retained. In the following studies, a homologous functional assay was developed to test the activity of three forms of receptor with respect to their ability to transmit a lactogenic signal. In this system, CHO cells were transiently transfected with a construct containing 2300 base pairs of the 5'-flanking sequence of the rat beta-casein gene fused to the chloramphenicol acetyltransferase (CAT) gene and an expression vector containing the various forms of rat PRL-R cDNA. The transfected cells were grown in serum-free medium in the absence or presence of PRL. In cells transfected with the long form of the PRL-R and beta-casein/CAT construct, a 7.2- +/- 0.9-fold induction (n = 3) of CAT activity was seen when cells were cultured in the presence of 400 ng/ml PRL and 1-mu-g/ml hydrocortisone. This level of stimulation was similar to that observed for the ovine beta-lactoglobulin/CAT construct in which a 5.7- +/- 1.2-fold (n = 3) effect was found. We also examined the functional activity of the intermediate Nb2 form of the receptor. Interestingly, this receptor was fully able to transmit the lactogenic signal and stimulate the reporter gene, to a level similar (6.9- +/- 1.8-fold, n = 3) to that seen with the long form of the receptor. However, in cells transfected with the short form of the rat PRL-R, PRL was unable to stimulate CAT activity. The three forms of PRL-R bind [I-125]ovine PRL with similar capacity. Overall, these results suggest that the long and short forms of receptor are probably involved in mediating different biological functions of PRL. Also, it is clear that the amino acid sequences required for the transduction of the lactogenic hormone signal are conserved in the Nb2 form of the PRL-R. Thus, this missing 198 amino acids must not be important, at least for mitogenic stimulation seen in Nb2 cells, nor for lactogenic signal transduction in this functional system.